Sharp Rise in Online Shopping

06/13/2016 0 comments
Sharp Rise in Online Shopping

'Online' is defined as sales where the final transaction is made over the internet or at a distance, irrespective of whether the internet has been used for browsing and price comparisons. Sales made using mobile phones and tablets are included in our figures.

Recent studies

UPS Study says avid online shoppers are making more than half of their purchases with e-Commerce. For the first time, consumers say they bought more of their purchases on the web than in stores, according to an annual survey of more than 5,000 online shoppers by United Parcel Service Inc.

Surveyed people said that 51% of their purchases were made online (compared to 48% last year). There are some generational changes, as well. Millennials' online shopping makes about 54% of their purchases. In addition, non-millennials made a pretty drastic surge in online shopping (49%) compared to only 44% in 2014.

People who completed the survey made only 20% of purchases in a traditional way: going to the store, browsing, and buying something. People are shopping online more, but also mixing techniques. For example, some said they went to a store, brought their phones and checked prices while in there. 42% are doing all their purchases online and 38% are mixing technologies.

People are rapidly adopting faster shipping options. More and more people are accepting what’s considered a free two-day shipping option (Amazon Prime) although you pay an annual fee. That is driving consumer expectations. Around 20% of people chose that opposed to traditional, slow shipping.

Retailers are experiencing a hard time coping with this. They are trying to revise their business models and trying to determine if it’s reasonable to retain a physical besides an e-store.


Regular and Unceasing Growth

The online retail sector is the main driver of growth in European and North American retailing, achieving in Europe growth rates of 18.4% (in 2014), 18.6% (2015) and expected rates in 2016 of 16.7% and in 2017, 15.7%. In comparison the annual growth rates for all types of retailing range between 1.5% and 3.5% per annum.

The recession has induced many shoppers to buy online rather from traditional stores, as reported. The fact that internet search is comparatively easy and predictable has made online retailing very attractive for a wide range of products. Retail focus on the growing use of mobile technology is an additional factor in making online retailing attractive and convenient.

As before the European online market is dominated by the UK, Germany and France which together are responsible for 81.5% of European sales in these eight countries.

In addition to these numbers, US online spending was $349.20 bn in 2015 and should reach $399.48 bn in 2016, an increase of 14.4%.

Effect on Traditional Stores

The growth of online sales at the current rate will inevitably reduce the market for traditional shops. By the time that online sales represent 5% or more of domestic retailing then the continued growth of online retailers is likely to come at the expense of conventional stores. In Europe as a whole, online retailers in 2016 are expanding by 16.7% in a fairly stagnant retail market, hence sales through stores are expected to diminish by -1.5% overall this year, and as much as -4.3% in the UK. The comparable figure in the U.S. is -2.2%. This is creating major strategic issues for store-based retailers. For policymakers, the results will be fewer physical stores and reduced employment in this key sector.

Online shopping to grow by $457bn in three years

A research shows online shopping to be worth $921bn in biggest four markets of UK, US, China and Germany

Online sales in the UK, US, Germany and China will grow by $457bn between 2016 and 2018, expanding the size of the online market to £921bn, according to research from OC&C Strategy Consultants, PayPal and Google.

Chinese shoppers now purchase products online from British retailers almost as frequently as domestic shoppers do. British retailers are the most popular international brands for German shoppers, and the second most popular in the US and China.

Chinese shoppers spend on average 2.7 times more with UK retailers than domestic shoppers, while German consumers spend 1.7 times more.

Anita Balchandani, head of retail at OC&C, said that the study conducted in 2015 shown that UK retailers and “are some of the world’s most popular and are in a strong position to seize more opportunities abroad.” This proved right.

Martijn Bertisen, sales director at Google UK, said: “The number of people with internet access is growing fast, with many new consumers skipping the desktop phase entirely and only experiencing the web through a smartphone. “Our study shows that this is increasingly translating into mobile transactions and that a mobile-first or even mobile-only strategy is now imperative to international success in retail. UK retailers should be well positioned to lead this growth internationally, as UK consumers are already among the most mobile of all.”

The survey was based on search trends on Google and payment transactions through PayPal.

Taking all this into account, we can determine that online shopping has a very clear and steady evolution.



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